Car Lease vs Buy Calculator (Canada, 2026)

How this calculator works

Leasing means paying for the part of the car you use up, plus interest on the money the leasing company has tied up. Buying means paying for the whole car, with interest on the loan, and then owning something you can sell.

The lease payment follows the formula on every Canadian dealer’s lease sheet. The net capitalized cost is the price less any cash down and trade-in. The residual is what the contract says the car will be worth at the end. Depreciation is the difference between the two, spread over the term. The finance charge is the net capitalized cost plus the residual, multiplied by the money factor, which is the APR divided by 2400. The payment is the sum, and sales tax is added to each payment and to the cash down.

The loan side uses the same math as the car loan calculator: sales tax on the price less the trade-in, then the cash down and trade-in come off, and the balance is repaid in level monthly payments.

To compare fairly, both paths are costed over the same years. Leasing costs the payments, the cash down with tax, the trade-in you gave up, and any charge for extra kilometres. Buying costs the payments made in that time, the cash down, the trade-in, and any loan balance still owed, less what you sell the car for. If you keep the car longer than the lease, the lease cost is spread over the same years as if you leased again on the same terms.

Sales tax on a lease payment by province

A $40,000 car leased for 48 months at 50% residual and 6.99% costs $591.42 a month before tax. Here is what tax does to it.

British Columbia’s provincial tax on vehicles rises with the price, so a dearer car can carry a higher rate than shown here.

Worked example: $40,000 car in Ontario, nothing down, 48 months

Lease at 6.99% with a 50% residual. Or buy with a 72-month loan at 6.99% and sell after 4 years for the same 50% of the price.

Line	Lease	Buy
Net capitalized cost	$40,000
Residual at 48 months (50%)	$20,000
Depreciation each month	$416.67
Finance charge each month (money factor 0.00291)	$174.75
HST at 13%	on each payment	$5,200 up front
Amount financed		$45,200
Monthly payment with tax	$668.30	$770.40
Payments over 4 years	$32,078	$36,979
Loan still owed after 4 years		$17,209
Sold after 4 years		− $20,000
Total cost over 4 years	$32,078	$34,188

Leasing costs $2,109 less over the four years, and its payment is $102 a month lower. The main reason is tax: the buyer pays $5,200 of HST on the whole car up front and pays interest on it, while the lease taxes only the payments. Buying the car at the end of the lease would cost $22,600, the residual plus HST. Keep a bought car 5 years or more and owning beats leasing again and again.

Assumptions

• The lease APR and the loan APR are the rates you enter. Dealer promotions often differ between the two, so enter each one from its own offer.
• The resale value after your keep period starts equal to the lease residual, so that both sides assume the same car value. Change it if you expect to sell for more or less.
• The break-even line assumes the car loses value at a steady yearly rate implied by your resale figure, and that you would keep leasing on the same terms.
• Not included: acquisition and disposition fees, wear-and-tear charges, gap insurance, and any difference in insurance premiums between a leased and an owned car.
• Sales tax on a purchase is charged on the price less the trade-in, the usual provincial treatment for dealer trades. Private sales are taxed differently in several provinces.

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